Contractors need insurance to protect their businesses from risks on the jobsite. Insurance is complicated and can be difficult to understand. Breaking down the type of liability policy you have can make it more digestible. Most liability policies are claims-made policies or occurrence policies. Knowing which you have and what that entails can save money and headaches if you have to make a claim.
In this part of the article, our Denver construction attorneys will explain the claims-made liability policy for filing claims.
Errors or omissions or general liability policies are often set up on a claims-made basis. This policy is generally a bit less costly than an occurrence policy and for good reason. To have a claims-made policy cover the claim, the incident needs to:
- Take place on the insured property
- Happen when the coverage is effective
- Be reported while the coverage is effective
- Be unknown before the policy begins
To illustrate what that could look like, imagine a visitor touring the site trips over a concrete pad in December. The contractor’s claim-made insurance policy ends in January. The visitor develops back pain, is later diagnosed with a herniated disc and decides to sue the contractor in March. A claims-made policy would not cover this suit because it happened outside of the policy effective dates.
Retroactive Reporting Period
It is possible to purchase a retroactive reporting period to add time to the end of the policy. This reporting period is not the same as being insured but allows you to report a claim after the policy period ends. The additional reporting period is normally around 60 days. Once the period is over, any claims made in regards to incidents from the coverage period are denied.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.